The fiasco in Washington over the partial government shutdown, raising the debt ceiling and deepening animosity between Republicans and Democrats (and Republicans and Republicans), has left many asking if there is any way out of this bitter, endless cycle. There may be.
The Financial Times recently suggested that America's largest foreign creditor -- China -- might want to reduce the size of its loans financing our debt. China, which holds 8 percent, or $1.5 trillion, in U.S. Treasury securities, is mocking our inability to reduce debt. The Washington Times reports that Chinese Commerce Minister Mei Xinyu called the shutdown and the congressional politicking over the debt limit "monkey business" that degrades the U.S. image worldwide. News outlet France 24 reports that a Chinese ratings agency recently downgraded its U.S. sovereign credit rating, and warned that "fundamentals for a potential default remained unchanged."
If a college student misspends money his parents give him, the parents would be foolish to send more money. They would be enabling bad choices. Isn't it the same with America's debt? Eight foreign nations besides China collectively lend hundreds of billions of dollars to the United States, enabling politicians to continue their irresponsible spending. Suppose the next time President Barack Obama and Congress come knocking, these nations say, "No more." Since a majority in Congress won't stop itself, foreign governments might assume the "parental" role.
It's like welfare reform, isn't it? In the 1990s, when President Bill Clinton signed welfare reform legislation, opponents claimed people would starve in the streets. They didn't. Many found jobs. When people were told the gravy train wasn't stopping at their station anymore, they adapted to new realities. Why can't it be the same for a nation? Stop us before we borrow again!
When Sen. Obama ran for president in 2008, he decried the $4-trillion debt under President George W. Bush, calling it "unpatriotic." Obama has added at least $6 trillion (and counting) to the debt, so what does that make him?
Indiana Republican Gov. Mike Pence, who spent 12 years as a U.S. congressman, believes Washington is incapable of reforming itself and that solutions can be found on the state level. "The Republican agenda," he explained to me by phone, "must not be just reducing government spending, but a permanent reduction in the size of the federal government and a restoration to the states of their constitutional responsibilities and privileges."
Pence says the "American people are figuring this out" as they see states -- especially those led by Republican governors -- cut taxes, reduce spending and eliminate unnecessary agencies and programs. He calls for a "national leadership that understands the importance of energetic federalism and states that innovate."
Rather than sending people to Washington in the vain hope the capital can be run like a state, Pence says Washington should look to states "where there is innovation in health care, education, balanced budgets and taxes" and follow their lead.
Pence recalls Ronald Reagan's First Inaugural Address in which he said, "All of us need to be reminded that the federal government did not create the states; the states created the federal government."
On a visit to Indianapolis on Feb. 9, 1982, Reagan defined the problem: "In recent years, power and tax dollars flowed to Washington like water down the Wabash. And yet things didn't get better. We didn't move closer to solutions; we moved farther away. Hoosiers, like citizens all over this country, began to realize that the steady stream of money and authority to Washington had something to do with the fact that things didn't seem to work anymore. . . . The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution."
This is a philosophy to which Republicans might return. They could couple it with an appeal to our lenders to "just say 'no' " the next time Washington asks them for more money.